Israel’s $45 Billion Shekel Defense Is Tested in Market Showdown
- Central bank sells FX, offers dollar liquidity through swaps
- Policymakers are intervening after deadly attack by Hamas
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Israel’s central bank has resorted to unprecedented measures to contain the most intense volatility faced by the shekel in two decades but couldn’t prevent its steep slide after an attack by Hamas militants led the government to declare war.
In a statement minutes before trading was set to begin on Monday, policymakers said they’d sell as much as $30 billion of reserves to support the currency and extend up to $15 billion through swap mechanisms. While the shekel slumped to its weakest since 2016 and a gauge of expected swings rose sharply, the Bank of Israel signaled confidence in its efforts so far, saying an emergency interest-rate hike isn’t currently on the table.